City of Wewoka, Okl. v. Banker

• Decision Date: 05 February 1941
• Docket Number: No. 2125.,2125.
• Citation: 117 F.2d 839
• Parties: CITY OF WEWOKA, OKL., et al. v. BANKER et al.
• Court: U.S. Court of Appeals — Tenth Circuit

117 F.2d 839 (1941)

CITY OF WEWOKA, OKL., et al. v. BANKER et al.

No. 2125.

Circuit Court of Appeals, Tenth Circuit.

February 5, 1941.

H. W. Carver, of Wewoka, Okl., for appellants.

W. R. Banker, of Muskogee, Okl. (A Camp Bonds, of Muskogee, Okl., on the brief), for appellees.

Before BRATTON and MURRAH, Circuit Judges, and KENNAMER, District Judge.

MURRAH, Circuit Judge.

The appellants challenge the jurisdiction of the trial court to award "between solicitor and client" fees to the appellee, W. R. Banker, for services rendered in connection with the foreclosure of certain paving bonds under the Act of 1923 (Chapter 173, Session Laws of Oklahoma, 1923, 11 Oklahoma Statutes Annotated, Section 107), in which suit the solicitor, appellee W. R. Banker, secured the restoration of assessments, penalties and interest against certain property included within Improvement District No. 3, City of Wewoka, Oklahoma.¹ The tax assessments, penalties and interest against said property had been paid by the surrender of bonds of the Improvement District to the City Clerk and City Treasurer, as provided by 62 Oklahoma Statutes Annotated, Sections 341 to 346, Chapter 58, Session Laws of Oklahoma, 1933, page 106, Section 5.²

The appellants concede the equitable jurisdiction of the court to award "between solicitor and client" fees in an appropriate case, based on the underlying principles announced in Sprague v. Ticonic National Bank, 307 U.S. 161, 59 S.Ct. 777, 83 L.Ed. 1184; Trustees v. Greenough, 105 U.S. 527, 26 L.Ed. 1157 and Wallace v. Fiske, 8 Cir., 80 F.2d 897, 107 A.L.R. 726, but earnestly contend that the facts presented here do not bring appellee, W. R. Banker, within the compass of the equitable jurisdiction of the court, authorized by these decisions.

The equitable jurisdiction of the court to award "between solicitor and client" fees, when the services performed result in a benefit to the parties of one class, has been sustained in many jurisdictions, and is well rooted in equitable principles under varying circumstances. "It is a general principle that a trust estate must bear the expenses of its administration. It is also established by sufficient authority, that where one of many parties having a common interest in a trust fund, at his own expense takes proper proceedings to save it from destruction and to restore it to the purposes of the trust, he is entitled to reimbursement * * * from those who accept the benefit of his efforts." Trustees v. Greenough, supra; Sprague v. Ticonic National Bank, supra; Wallace v. Fiske, supra; In re Middle West Utilities Company, D.C., 17 F.Supp. 359; Clarke v. Hot Springs Electric Light & Power Co., 10 Cir., 76 F.2d 918; Security National Bank of Watertown, S. D. v. Young, 8 Cir., 55 F.2d 616, 84 A.L.R. 100; Nolte v. Hudson Navigation Company, 2 Cir., 47 F.2d 166 and Central Railroad & Banking Company of Georgia v. Pettus, 113 U.S. 116, 5 S.Ct. 387, 28 L.Ed. 915. See also Wallace v. Fiske, 8 Cir., 80 F.2d 897, 107 A.L.R. 749 and Hempstead v. Meadville Theological School, 286 Pa. 493, 134 A. 103, 49 A.L.R. 1149.

"In the actual exercise of the power to award costs `as between solicitor and client' all sorts of practical distinctions have been taken in distributing the costs of the burden of the litigation." Sprague v. Ticonic National Bank, supra 307 U.S. 161, 59 S.Ct. 780, 83 L.Ed. 1184. The power of the court is capable of abuse and should be exercised with caution and regard to the rights of litigants. Trustees v. Greenough, supra; Sprague v. Ticonic National Bank, supra; Central Railroad & Banking Company of Georgia v. Pettus, supra; and In re Middle West Utilities Company, supra.

Whether or not, in these circumstances, there was a proper exercise of equitable jurisdiction is our problem in this case.

The appellants challenge the jurisdiction of the court over the subject matter but in their brief, and on argument, it is fairly conceded that the court does have jurisdiction of the subject matter and our independent consideration of this question convinces us that all the jurisdictional requirements are met.

The evidence shows that the appellee, W. R. Banker, was counsel for the relator and intervenors, who were the owners of 21 bonds, issued by Improvement District No. 3 of Wewoka, Oklahoma.³ They will be referred to herein as relator's bonds.

On March 22, 1937, the relator instituted a class suit to adjudicate the amount of, and foreclose, the delinquent paving assessment liens existing against the respective properties located in the said District, pursuant to the provisions of Chapter 173, Session Laws of Oklahoma 1923, page 289, 11 Oklahoma Statutes Annotated, Section 107. The petition contained 87 separate causes of action against 235 separate lots and tracts within the District.

On June 3, 1938, by amendment, the relator made the City of Wewoka, Oklahoma and M. M. Sebastian, as City Clerk and City Treasurer, parties defendant and alleged that a great number and amount of the paving assessments, penalties and interest, within the said District had been discharged and receipts had been issued by the said Clerk showing payment of the same. The said assessments, penalties and interest had been paid by the surrender of bonds of the said District to the City Clerk, pursuant to the provisions of the Act of 1933, supra. That the said purported payment of the tax assessments, penalties and interest by the surrender of bonds of the said Improvement District to the City Clerk was void and violative of the rights of the relator and the owners of all other outstanding bonds of said series and interest coupons attached to the said bonds. The relator prayed that the assessments, penalties, and interest so paid by the surrender of bonds, pursuant to the unconstitutional statute, be restored to the tax rolls and that the records of the City Clerk and City Treasurer show the re-establishment of the installment assessments and the restoration of the bonds to their original status. Relator further prayed that his counsel be allowed a reasonable attorney's fee out of the funds held by the City of Wewoka, Oklahoma, for the payment of the bonds issued by the Street Improvement District, to be charged proportionately against the bonds benefited thereby.⁴

M. M. Sebastian, as City Clerk and City Treasurer, of the City of Wewoka, filed separate answers in which he admitted the issuance of the receipts for the tax assessments, penalties and interest in consideration for the surrender of the Improvement Bonds; asserted that such procedure was in pursuance of the Act of 1933, supra, and further alleged that after having refused to accept some of the bonds in payment of some of the Street Improvement assessments, certain bondholders obtained a Writ of Mandamus from the District Court of competent jurisdiction, compelling him to accept the Street Improvement Bonds in payment of the assessments, penalties and interest, in conformity with the Act of 1933, supra, and that a part of his acts in connection therewith were amenable to the judgment of the District Court. He denied the right of the appellee, W. R. Banker, to attorney's fee and prayed that no other money judgment be awarded to the plaintiff as against the City Clerk and City Treasurer.

The City of Wewoka, Oklahoma, answered and denied any responsibility for the collection of the Improvement Assessments of the District, stating that the duty of collecting Street Improvement Assessments was upon the City Clerk and the City Treasurer. The City specifically denied that the appellee, W. R. Banker, was entitled to any attorney's fee or any other sum in the custody of the City Clerk and City Treasurer, and prayed that no judgment for attorney's fee, or any other costs be awarded to the plaintiff.

On February 6, 1939, the Court rendered a Summary Judgment, based on the pleadings, decreeing a foreclosure of the delinquent assessments and the sale of the parcels and tracts of land against which there were delinquent installments of assessments. The Court further ordered that each and all the purported receipts, issued by the City Clerk of Wewoka, showing payment, or settlement, of installments of assessments levied in the special Improvement District No. 3, wherein Improvement Bonds of the District had been surrendered in payment of the said installments, in pursuance of the Act of 1933, supra, be cancelled and ordered the assessment rolls to show each of the installments of assessments, penalties and interest so paid, restored to the tax rolls of the taxing district.⁵ The Court ordered the relator reimbursed for the costs advanced, in the sum of $543.11, to be paid out of the first sums coming into the hands of the City Treasurer and belonging to the Improvement Fund. The Court apparently reserved for further consideration the allowance of fees to the appellee, W. R. Banker.

Thereafter, and on October 16, 1939, appellant, S. N. North,⁶ answered, denying that appellee, W. R. Banker, was entitled to counsel fees to be paid out of any funds of the District and specifically denying that the re-establishment of the installments of assessments and the restoration of the bonds were beneficial to him.

Simultaneously, the City of Wewoka, the City Clerk and City Treasurer of the said City answered, denying the jurisdiction of the Court to allow counsel fees to be charged against bondholders not parties to the suit, and further denying that the appellee, W. R. Banker, had performed any services beneficial to the bondholders.⁷

At the time of the institution of the suit by the appellee, W. R. Banker (March 22, 1937), bonds numbered 1 to 40 and bonds No. 57 and No. 73 had been paid in full by the City Treasurer. The bonds enumerated in Marginal Note 5 had been surrendered in payment of tax assessments, penalties and interest, levied against certain tracts and parcels of land included within the taxing district owned by the bondholders who had...